European markets posted modest gains during July. Focus was generally on the interim reporting season, which was broadly supportive for European markets. Stylistically, growth outperformed value over the month and the former has now also outperformed the latter year to date.
The fund had a positive month performance wise.
The biggest contributor to performance over the month came from Artefact (digital marketing services) which received a bid approach from private equity. D’Ieterin (windshield repair and car dealerships) was also up strongly on news that a stake in its windscreen repair business, Belron, had changed hands at a very attractive indicative valuation. Elsewhere, good share price performances from Sword (software and IT services), Media and Games Invest (gaming and digital marketing) and Limes Schlosskliniken (mental well-being clinics) all contributed to the gains of the fund over the month.
On the negative side, Signify (lighting) sold off following results, as did Kaufman and Broad (housebuilding). Bpost (Belgian postal services) was also weaker over the month. We have added to all of these positions.
The fund purchased Atea during the month. Atea is a value-added reseller of IT storage and server solutions in the Nordic region. It has a history of attractive returns on capital and is in our sweet spot of undervalued growth, on a free cashflow yield of over 6% for 5%+ revenue growth.
We exited our holding in Indra Sistemas, as we are increasingly nervous of the influence being exerted by the Spanish government, Indra’s largest shareholder, over the business.